UK - New buy-out providers with little or no reserves have almost no ability to absorb any investment or mortality shocks, said L&G bulk purchase annuities sales director David Evans.
While sitting at the same discussion panel as Synesis Life chief executive Isabel Hudson, Evans of Legal & General cast doubt as to whether the burgeoning buy-out market could live up to its promises.
“Bond issuers could default or members could live much longer than expected,” he said, outlining two of the possible risks.
Evans suggested the Financial Services Compensation Scheme could possibly “bail out” insolvent insurance companies but then questioned how these would be valued.
In her rebuttal to the comments, Hudson stated Synesis Life was aware of the type and quality of capital it needed to compete in the market.
“We have branded capital with the Royal Bank of Scotland and JP Morgan as backers,” Hudson said. “We are tightly regulated by the Financial Services authority and it would be hugely embarrassing if we were unable to meet our liabilities,” she added.
Hudson concluded the Synesis Life investors were completely committed to taking on the risk of competing with the buy-out market.
The British Medical Association (BMA) has warned chancellor Philip Hammond to reform the NHS pension scheme rules or doctors will reduce their working hours.
The lifetime allowance should be scrapped and replaced with a lower annual allowance, last week's Pensions Buzz respondents said.
Action for Children Pension Fund has outsourced its pensions administration to Trafalgar House.